Nike downplays quarterly revenue forecast as China is battered by pandemic disruptions

Nike has downplayed its quarterly revenue forecasts after its most profitable market, China, is battered by pandemic disruptions.

The sportswear giant’s shares tumbled 3% to $107 as trading started.

Experts and analysts are mixed about Nike’s prospects this year after Covid lockdowns have been relaxed in several of the country’s major cities.

Home-grown sports brands such as Anta Sports and Li Ning have remained strong amid a cut down in spending from Chinese consumers.

“We are taking a cautious approach to Greater China, given uncertainty around additional COVID disruptions,” Nike chief financial officer Matthew Friend said.

Nike expects Q1 revenue to be flat to slightly up, however below Refinitiv expectations of a 5.1% increase.

“The guidance was somewhat disappointing,” Morningstar analyst David Swartz told Reuters.

Chinese fashion retailers are currently stuck with large piles of unsold stock after reopening has seen large numbers of stock being shipped from warehouses to shop shelves.

Nike claimed its gross margins were under pressure this year as a result of higher freight and product costs.

It also forecast fiscal 2023 revenue to increase in low double digitals.

For last year’s final quarter, Nike reported revenue of $12.23 billion, beating estimates of $12.06 billion. It cited  higher sales in Europe, Middle East and Africa as the main reason.

As a result of the company’s withdrawal from Russia after its invasion of Ukraine, Nike recorded a $150 million charge.

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